Germany: Exports flatline in January; government announces fiscal stimulus package
The external sector remained on weak footing at the start of the new year as exports were flat month-on-month on a seasonally- and calendar-adjusted basis in January, down from December’s revised 0.2% expansion (previously reported: +0.1% month-on-month). Imports swung from a revised 0.3% contraction in December (previously reported: -0.7% month-on-month) to a 0.5% expansion in January. Consequently, the calendar- and seasonally-adjusted trade surplus narrowed from EUR 19.0 billion in December to EUR 18.5 billion in January.
On an annual basis, trade data was more downbeat. Exports fell 2.1% year-on-year in January, contrasting December’s 2.4% expansion; hence the 12-month moving average of export growth eased to 0.5% from 0.8% in December. Imports, meanwhile, fell 1.8% over the same month a year prior in January, contrasting the 1.4% expansion in December; the 12-month moving average of import growth moderated from 1.4% in December to 0.8% in January. All told, the 12-month rolling sum of the trade balance edged down from a EUR 225.9 billion surplus in December to EUR 225.8 billion in January.
The president of the Federal Association of Wholesale, Foreign Trade and Services, Holger Bingmann, stated: “The unrest on the world market is leaving its mark on both German exports and imports. With the coronavirus, an additional factor has now come into play that will significantly burden the global economy. […] We are in a situation where we need political support even more than before to mitigate the effects [of a host of challenges]. We therefore welcome the measures that the coalition committee decided on tonight.”
Amid various challenges faced by the German economy with the recent outbreak of the coronavirus, the German federal government announced a fiscal stimulus package on 8 March. The package includes a loosening of the conditions of the short-term work schemes subsidized by the government, while public investment will be raised by EUR 3.1 billion per year from 2021 to 2024. Moreover, the coalition government continues to prepare liquidity measures for firms hit by the economic impact of the coronavirus.
Commenting on the announcement, Carsten Brzeski, chief Eurozone economist at ING, stated: “In our view, the German government’s package is a good step in the right direction, but it will only tackle the impact from a short-lived economic shock. If Covid-19 spreads further and the economic impact worsens, last night’s move will not have been the final word.”